When the erstwhile Percept Advertising changed the name on its signboard to Percept / H, the advertising fraternity, by and large, ascribed little to the development. The move, however, was more then a mere change in nomenclature. For not only did the rebranding reflect a change in the agency's shareholding pattern (with Japan's Hakuhodo Inc picking up a 50-per cent stake in the agency), it was also symbolic of Percept's transition from a family-run business to a corporatised agency structure. A transition process that can be traced back to the time Rajesh Pant was appointed agency CEO in January 2002. In this interview with N Shatrujeet of agencyfaqs!, Pant (who has put in time at Trikaya Grey, Lintas, Citibank and Sony Entertainment Television) speaks about the changes that Percept has undergone over the past two years or so, and how the agency has benefited from the whole exercise...

Q. At the time you joined Percept / H, you had told agencyfaqs! that you "plan to grow madly". How does the scorecard read two years hence? How 'madly' have you grown?

A. Firstly, the way I want to grow has not changed. But I think what I have learnt over the last couple of years is that you have to pace yourself. You might want to do something, but, at times, the environment you function in places a speed-breaker before you. Therefore, what I say is that I am traveling at 50 per cent of the speed that I would like to travel at.

That said, this being a privately held company, I cannot divulge numbers. But in terms of revenue, I have grown consistently. Year 2002 over 2001, I would have grown some 30 per cent, and over the next calendar year, I have grown by 60 per cent. And this year, I intend to grow by about 75 per cent. So, as far as the velocity of growth is concerned, you can see that the rate here is much higher than that of the industry. Is it something that I had set out to do? No. I actually wanted to travel much faster. But then, the desire to travel faster is true to all of us. You ask Mike (Khanna), you ask Prem (Mehta), they all want to travel faster, don't they.

Q. You mentioned that there are certain factors that inhibit the capability to grow at a faster rate. What were the factors that you encountered here?

A. What inhibits growth is, one, physical issues. Are that many clients looking to change their agencies? Just because you wish more business, it doesn't mean clients are going to open their doors and award you business. Second, you have to make sure that your in-house capabilities are in sync with your desire for growth. For instance, if you want to be seen as an agency in its best form, you have to build capabilities within the system.

In the beginning, I tried reaching milestones without building capabilities, in the hope that I would attract people as we went along. But I was wrong. It has never worked before, and there is nothing to suggest that it will work in the future. I thought I could buck logic… but it's okay. I have shareholders who are extremely helpful and understanding. And the good thing was I saw the flaw in my approach early on and corrected myself.

Q. What are these capabilities that you speak of?

A. The first capability is to get people who have a fundamental understanding of the markets that they operate in. If I have Parle Beverages as a client, I must have people within the agency setup who: one, have an FMCG background; two, have an innate understanding (or can understand) of the marketing of beverages, whether it is water or cola or tea; and finally, understand the category in which that particular brand operates in. Now this is very tough to find in today's agency environment. I have nothing against young people - I hire them all the time. But I think it is tough to pluck them out of the market. They have to be trained. So that is the first thing we had to do.

The second thing is that we needed a group of people who understand consumers. People who can take the marketing strategy and convert it into great advertising strategy, which can then be passed on to creative people to generate communication ideas.

Now all this sounds very obviously formulaic, but fortunately or unfortunately, the formula really hasn't changed. We keep on trying to do these things properly. And if we did these things properly, agencies would be nearer consulting organisations than near the supplier end of the chain. So, I have been trying to build capabilities, and while doing so, I think we have been reaching our business goals, be it through new business acquisitions or through organic growth.

Q. What were the specific problem areas that demanded your immediate attention?

A. When a new head of business comes in, the normal attitude is to look at the organisation's past as full of shortcomings that need to be corrected straightaway. I think that is a pretty silly view to take, because the business had existed much before the guy came in and occupied the chair. And, in all probability, the business had existed fairly well - otherwise the guy wouldn't have had that chair to occupy. Which means that there was something good going there.

Therefore, the stance that I took was that there was nothing wrong with what had happened in Percept's past. We could only use those experiences to build and grow. This company came from nowhere and has grown to become nearly a Rs 600-crore company. In my book, my job was not to make an improvement or a correction. All I wanted to do was bring in some change so that it fit into my idea of what a good agency should be.

Q. And what is your idea of a good agency?

A. My idea is that an agency exists for the sole purpose of creating great advertising. And so I wanted to bring in people who wished for that to happen; people who don't necessarily think that great advertising means award-winning advertising. I wanted people who think that great advertising is something that instantly appeals to the largest mass of people to change behaviour. I went about looking for people who shared these values. Irrespective of whether they were within the organisation or outside. There was no question of looking for those qualities outside if I found them within these four walls.

Q. Let me go back to the time you quit Sony Entertainment Television. You were the number two there, driving the new business initiatives of a multinational media conglomerate. What prompted you to leave Sony and settle for a mid-sized advertising outfit like Percept, which had but a loosely defined affiliation with Hakuhodo?

A. It's like this. The move from Sony was prompted by the fact that Sony, at that time, was going through a downturn. They were closing down the various parts of this diversification business. When I took on the diversification portfolio, I knew these are high risk-high reward areas. Anyway, Sony took the decision not to go further. The international thing had already been set up and we had a person in place. The net result was that I saw that in a year or so, there would be little or no place for me within the realisation. At that point in time, there were various opportunities that opened in front of me. One of them, which I thought was the most honest of the proposals that came to me, was from Harry (Harindra Singh). There was nothing premeditated about my move here. In fact, advertising was one of the last things I had on my mind, as I had left Lintas years ago. It was one of those things that just happened.

Q. Considering Percept, at that time, was a very 'family-run', what sort of a role did you, as an outsider, envisage for yourself in the agency?

A. Harry told me that we are what we are, but this is the way we have grown. And this is the way we want to go into the future. He did mention that he had a loose affiliation with Hakuhodo, and that he was working towards making that a real and meaningful alliance. He also told me that Percept was always known to be this family-run, within-itself kind of agency that had come from nowhere and built itself into quite an entity in very little time. He told me that he would be very happy if I wanted to be a part of Percept.

You have to realise that Harry and Shailendra (Singh), the erstwhile 100 per cent shareholders of the agency, have, in fact, taken some very brave decisions in opening up their businesses to people outside their family. They have attracted talent into the organisation to help it grow. They sold 50 per cent of the stake to Hakuhodo. Harry and Shailendra have created a base for the realisation to grow in its next phase. In doing this, there has been a culture change. And what I am learning is that it takes time for a culture to change and a new culture to take root in an agency - even if it's for the best. People have to respond to new styles of working. And I have been damn lucky because I think the transition here has not been a painful one. Okay, it has not been painless, but it hasn't been painful either.

Q. You mentioned Harry telling you that this is the way Percept has grown, and this is the way the shareholders would like Percept to go. What are the commonalities and differences between the two phases of Percept's growth?

A. The commonality will always be in terms of numbers - because numbers don't lie.

The difference is that if you want to grow in quantum leaps, all growth cannot come from within, all growth cannot come because of you. Growth can come because of the environment that you set up. For instance, five years ago, no pitch that Percept participated in would be complete without either Harry or Shailendra taking part in it. No business transaction would be complete unless they gave their blessings to it. Today, we make business pitches where, perhaps, branch head-level people operate. We make business openings at head-of-planning levels. The point is that the CEO of the company does not get involved in everything that the agency does.

What has clearly happened is empowerment, a belief that another person can take wise decisions and carry out responsibilities successfully. This not only gives people in the realisation confidence and self-belief, it also give the CEO of the company the time to look at other means of growth, to explore new possibilities for revenue generation, to encourage every initiative that strengthens the agency brand… to talk to journalists.

Q. In effect, Percept has made a transition from a strong family-held setup to a more corporatised one?

A. Let me put it this way. Up to end-2001, either Harry or Shailendra were involved in every part of this business. Within the first few months of 2002, there was a gradual shift whereby they told me, 'Call us when you want us.' In 2003, it was, 'Don't call us. We'll call you.' Today, it is coming to, 'Hey, we're glad you guys are doing great.' They are available to us as and when we want them - after all, being shareholders, there are responsibilities. But it's much the same as calling the Hakuhodo shareholders when we want them to give us a helping hand. Yes, the agency has moved into a much more corporatized culture, which is what progress is all about.

Q. Apart from a change in the shareholding structure and a change in the agency's name, what are the other deep-seated changes that the formalized Hakuhodo alliance has brought to Percept? How has the agency benefited?

A. Let me break some widely held beliefs here. One is that when a foreign partner picks up a stake in a local agency, the local agency is blessed. The partner will ride in on a golden chariot, accounts will flow into the agency and the agency will have a windfall. And, of course, everyone in the agency will get a new reporting relationship, either in Hong Kong or Singapore or in London. None of this happened in our partnership with Hakuhodo. And I think it is delightful, because, for once, Hakuhodo has acted as a partner in the real sense of the word.

It said - and they continue to say it - that we are the world's sixth largest agency, and we have grown to this stature by dint of hard work and creation of resources. Hence, you do the same. Call us when you need us, but do not expect us to open a tap from which accounts will flow. Yet, if any of our clients want a cross-global or cross-Asian or a pan-South Asian relationship, you will obviously be there. But, learn to stand on your own two feet.

This, to my mind, is a great thing. The net result is that I have not suddenly acquired 15 new accounts, I have not acquired a new boss, and I do not have to attend a conference call to tell someone how I am doing this week. There is a set of people sitting in Tokyo who are there for assistance and information whenever I need it.

What Hakuhodo brings to Percept is a great wealth of customer knowledge. And they are being careful not to simply take over things. They allow us to run the business the way we want. I think this arrangement has worked wonderfully well. One of the things that I keep hearing when I interview people is that Percept is visibly changing. I trust that this is a function of the larger changes that have been happening in the agency.

Q. If people say Percept is visibly changing, what, in your view, are the things that have contributed to this change. It has to be the people you have...

A. There is no other factor, really. Let's say I was lucky enough to have found Elvis (Sequeira), who came in from Lintas as our national creative director. I think he shared a similar vision in terms of what constitutes a great agency, and what its creative product should be. I am also fortunate to have found a head of planning - Sheetal Choksi - who was within the realisation as a group head. Planning is something that is central to our agency, and therefore I want the thought of planning to permeate into every part of the agency, and I think Sheetal is the right person for it.

I am lucky to have just recently got Sanjay Masand (from Advertising Avenues) as the head of our Mumbai office. He has the right attitude to take the office forward. Then Sanjay Sant (from Ogilvy & Mather, China) has come on board as COO. And, of course, we have all the branch heads who are the pillars of the agency in the respective cities they operate in.

I think the big thing is that all of us here are committed to change. More importantly, we are committed to the client. See, at the end of the day, you may be changing, but what does that change amount to? Where are you going? I have defined change by the fact that over the next five years, we certainly want to be amongst the Top 10 agencies. Secondly, our mission in life is to get the faith and trust of our clients by helping them to keep in touch with their customers as many times as possible. And our measurement is in terms of how committed we are to our clients, demonstrated not just by the amount of time that is spent with the client - though that is also certainly there - but our knowledge level of the client's business and his market. I would like my group heads to be absorbed by our clients. This is certainly a culture push into a new direction.

Q. The client-agency relationship, as it exists today, is pretty strained, especially over the issue of agency remuneration. Having been on both sides of the table and having seen the respective compulsions, is there a way out? How is this issue reconciled?

A. There is no question of reconciliation. I learnt a long time ago that if there is a problem, there is a solution. And if there is no solution in sight, the problem becomes a fact of life. I think we are moving from the remuneration issue being a problem to the area of fact of life.

The issue, as I see it - and I stand corrected because I am not a guru in this matter - is that the fundamental issues have nothing to do with client-agency relationships. The issue is to deal with the fact that advertising still does not have a standard of knowledge. It does not, therefore, have a standard of judgement. Which means that if I say, 'This will work,' the other person will say, 'Sorry, how can you be so sure?' There was a point in time when you could say, 'No, just take my word for it, it will work.' And your word was taken because the client felt you knew the business and you were saying it, so he wasn't taking so much of a risk.

Times have changed since then. Today, it is a much more complex market, with far too many choices for the consumer. There are far too many distribution channels, far too much media fragmentation. And most clients and agencies don't seem to know how to respond to competitive situations. In this scenario, because the risks attached to making a decision are far higher, the question of trust between two people - especially with opposing ideas or points-of-view - is also at risk. And therefore, the argument with the stronger chequebook will win.

Now I am not saying that clients are necessarily the ones with the stronger chequebook, because we must also understand that the clients are the guys who pay for everything. They are the guys who take all the risks. Agencies would like to believe that the client is holding the trigger, but the client is the man who is actually at the dangerous end of the gun. Agencies have to realise this. Once you realise the risk and the complexity - which is what has created the change in the way clients responded to Subhas Ghosal and how they respond to me - then you start realising what your contribution is based on. Is your contribution based on your own experience and knowledge, or is it based on empirical evidence that is documented? The case of So-and-so versus the People of India in the Calcutta High Court, 1931 - that is evidence. Pick up any book on medication, and it'll tell you empirically what has happened. That then becomes your standard of knowledge, which you can refer to. But we in advertising don't have any similar standard of knowledge.

Q. But successful advertising cannot function by adhering to standard knowledge. After all, standard knowledge is what has already been done, and advertising - which inherently has to break clutter to be noticed - cannot succeed by simply doing what has already been done, right?

A. That is why I say that it is not the ultimate judgement of creative that is a problem. It is the formation of the strategy that is the problem. Query the client and nine times out of ten he will say he has no problem with the creative. 'But tera strategy kidhar hai?' he asks. Is this the right strategy? Should I sell my new top-end calculator on its good looks, on its pricing, on the technology it packs, on the brand name, should I give discounts, should I package it along with something else… that is what the client wants to know. My belief is that there are groups of people - brilliant people - who have some innate knowledge of the secret of planning and the secret of how consumers connect. Which is why I am saying that we want to base everything on a great consumer insight. Clients are not fools, and they will not let a good idea rot if they see it is bang on strategy. I think agencies will have to produce great strategy. Once they do that, the creative work will sail through. The problem is that most people mistake creative for strategy.

My interpretation to all this is that in those days things were less complex, so decision-making was much easier. Today, the scene is complex, so decision-making is far more difficult. The onus on the agencies is to understand and respond to it accordingly. How come consulting companies have grown in size and stature? Everybody cribs about how consultants charge a lot and all that. If clients are paying less and less money, how come consultants are not cutting on their remuneration deals and are yet growing? They have a body of knowledge, we also have a body of knowledge. I think consulting companies prove their knowledge, while we agencies don't. And that is what agencies have to start doing to regain the client's trust.

February 16, 2004
Mumbai
You can write to Rajesh Pant at
rp@perceptindia.com